What is Lenovo’s current competitive position, and how can Lenovo maintain or increase its PC industry market share and margin over time?
Lenovo is one of the best technology companies in the world in the field of producing innovative PCs and mobile Internet devices. Lenovo takes leading position as the PC manufacturer in the world, and it is the fourth largest supplier of smartphones. The company is listed in the Global Fortune 500 (Daft 118). Today, Lenovo is a corporation, which costs $47 billion. The growth of Lenovo is ahead of the average market indicators for more than four years.
Today’s impressive success of the Chinese Company was highly influenced by the acquisition of Motorola Mobility in July 2014. As a consequence, the company became the world’s third largest smartphone manufacturer, and also strengthened its leading position in the sphere of innovation. Motorola counted more than 2,000 engineers and technical specialists who were the industry leaders and the authors of thousands of patents (Griffin 200).
Thus, Lenovo makes the products that are the most relevant in the current market: PCs, smartphones, tablets, Smart TVs, servers, workstations and storage devices. The primary difference of Lenovo from the competitors is the comprehensive vertically integrated business model. This model is unique among major PC manufacturers. It provides a significant competitive advantage, helping them to produce more innovative devices, efficiently and actively pursue opportunities for the development of the PC market.
During global expansion, Lenovo consolidates its position in the international market significantly. They invest not only in sales but local production in various countries, research activities and other important areas. The combination of global reach and attention to local capabilities allows them to create a new type of company — “global-local” company (Segal-Horn and Faulkner 456). It helps to implement the strategy of defense and attack and to lay the foundation for long-term success. Innovation is the primary objective of Lenovo Corporation.
How should Lenovo develop its internationalization strategy going forward?
The main driving force of the internationalization is private enterprises. They are interested in the well-known brand and high technology. In this regard, Lenovo Company is an ideal example. In 2004, the company acquired the PC business from IBM and since then all the achievements of the company integrated into a single product line under the name ThinkPad (Yu 359). Cleverly using the existing well-known brands, Lenovo quickly establishes its presence and awareness in the global market by purchasing them (Johansson 194). Last year, Lenovo overtook HP, becoming the manufacturer number one. It is obvious that the strategy of the company proves its effectiveness.
Three years ago, the internal circulation of Lenovo reached about half of the total turnover. However, in the first half of the year 2014, the domestic turnover decreased to 36%, respectively, foreign incomes rose to 64 % (“Annual Report 2013/14” 192). According to the report of the company, the global share of PC Lenovo increased by 3 % and is close to 20% of the world market. In global sales of PCs, it takes the first place in the world; the third place in the sales volume of tablets; and the fourth place in the volume of smartphones sales.
In the Chinese market, the sales volume of the smartphones Lenovo is in the lead and even leaves behind Samsung Company (Yu 359). The turnover of Lenovo in the first half of the year increased 18%, to $ 10.4 billion; net profit reached $214 million and increased 23% (Annual Report 2013/14 190). Developing countries are the attractive objective for the development of Lenovo Corporation as they are more attentive to prices. Thus, Lenovo consolidates its position in emerging regions.
Works Cited
Annual Report 2013/14. Lenovo Group Limited. 2015. Web.
Daft, Richard. Management. 12th ed. Boston, MA: Cengage Learning, 2015. Print.
Griffin, Ricky W. Fundamentals of Management. 8th ed. Boston, MA: Cengage Learning, 2015. Print.
Johansson, Johny K. Contemporary Brand Management. Thousand Oaks: SAGE Publications, 2014. Print.
Segal-Horn, Susan, and David Faulkner. Understanding Global Strategy. Andover, Hampshire: Cengage Learning EMEA, 2010. Print.
Yu, Tony Fu-Lai. Handbook of East Asian Entrepreneurship. London, UK: Routledge, 2015. Print.